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Standard Flood Hazard Determination Form

What is Standard Flood Hazard Determination Form?

Standard Flood Hazard Determination Form

The Standard Flood Hazard Determination Form (SFHDF) identifies whether a property is located in a special flood hazard area, if the borrower is required to obtain flood insurance, and if federal flood insurance is available. The SFHDF has been designed to facilitate compliance with the flood insurance purchase requirements of the National Flood Insurance Reform Act of 1994. The lender relies on the SFHDF when making, increasing, extending, renewing, or purchasing a loan to determine whether or not flood insurance is required and available on the property.

At the time of processing the loan application, the lender obtains the SFHDF to identify if the property is in a special flood hazard area and if flood insurance is required and available. SFHDF are generated by a Flood Zone Determination Company. If the property is in a special flood hazard area, the lender sends a Notice of Special Flood Hazards and the SFHDF to the borrower advising the borrower to obtain flood insurance. The amount of insurance coverage is based on the combination of loan amount, replacement value of the property, and maximum federal insurance coverage limits. The lender cannot fund and close the loan without receiving the proof of obtaining flood insurance.

Source :www.MortgagesAnalyzed.com

Special Flood Hazard Area (SFHA)

Federal Emergency Management Agency (FEMA) maintains and updates flood maps that identify the risk of flooding in a community by assigning flood zone categories to different parts of the map. Flood maps are also known as Flood Insurance Rate Map (FIRM).

Within a flood map, a flood zone denotes the level of risk for flooding in a particular area. Flood zones are assigned codes that denote different levels of risk. The flood zone codes used are A, AO, AH, A1-A30, AE, A99, AR, AR/A, AR/AE, AR/AO, AR/A1-A30, AR/A, V, VE, V1-V30, B, C, X, D. All flood zones beginning with the letter "A" or "V" are considered Special Flood Hazard Areas (SFHAs). If any part of the building or mobile home is within the SFHA, the entire building or mobile home is considered to be in the SFHA. In an SFHA all or a portion of the property has a 1% chance each year of being inundated by flood waters. In the context of mortgages, there is at least a 1 in 4 chance of flooding during a 30-year mortgage.

The current NFIP map may be obtained from FEMA by calling 1-800-358-9616. Scanned copies of the NFIP maps can be viewed on FEMA's Flood Map Service Center (MSC) webpage.

Source :www.MortgagesAnalyzed.com

Contents of Standard Flood Hazard Determination Form

The information in a SFHDF that is of importance to a mortgage transaction is listed below.

  1. Collateral: The address and parcel number of subject property for which the flood determination is being performed.
  2. Federal Flood Insurance Availability: This section identifies whether federal flood insurance is available or not.
  3. Is Building/Mobile Home In Special Flood Hazard Area: Identifies whether the property is in a special flood hazard zone. If marked as yes then flood insurance is required. If any part of the building or mobile home is within the Special Flood Hazard Area (SFHA), the entire building or mobile home is considered to be in the SFHA. All flood zones beginning with the letter "A" or "V" are considered Special Flood Hazard Areas (SFHAs).
  4. Date of Determination: The date when the flood determination was performed.
Source :www.MortgagesAnalyzed.com

Borrower's Consideration

Review Form – Verify If You Need Flood Insurance

Review the SFHDF and verify the following:

  1. Flood Hazard Area: Review Section D, Determination that identifies whether your property is in a special flood hazard area. Compare this with the Notice of Special Flood Hazard Area and the appraisal to ensure that the information is consistent with the other documents. If your property is in a flood zone then you will be required to obtain flood insurance.
  2. Address and APN: The address and APN listed in the collateral should be correct. Even slight variations in address must be corrected. Typically, a separate SFHDF is obtained for each structure when you have multiple structures on the property.

Obtain Flood Insurance

If your property is in a special flood hazard area, you may need to provide a copy of completed SFHDF to an insurance agent to obtain federal flood insurance.

Source :www.MortgagesAnalyzed.com

Lender's Consideration

Flood determination must be obtained for every loan when making, increasing, extending, renewing, or purchasing a loan. Flood determination should be ordered within the loan processing stage so that the need for a flood insurance can be identified early in the process.

Relying on Previous Flood Determinations

For loan renewals, extensions, or modifications, you may rely on a previous flood determination if the following conditions apply:

  1. The flood determination was performed within the last 7 years.
  2. The previous flood determination was made on an SFHDF.
  3. The property is not in a community that has been remapped.
  4. The refinancing or assumption is made on the same property by the same lender who obtained the original determination. A loan refinancing or assumption made by a lender other than the lender who obtained the original determination would constitute "making" a new loan, thereby requiring a new determination.

Certain additional conditions may apply. Therefore, it is best to obtain guidelines form your legal and/or compliance departments before you start relying on previous SFHDFs.

Notice of Special Flood Hazard Area

You need to send a Notice of Special Flood Hazards and Availability of Federal Disaster Relief Assistance to the borrower when a property has been identified to be in a SFHA. When applicable, ensure that after obtaining the SFHDF the loan processor is sending out the required disclosures. Read more about Notice of Special Flood Hazards.

Quality Control

From a compliance perspective, the primary risk is incorrectly identifying that the property is not in a flood zone. To avoid risk of being non-compliance with flood regulations, it is important to have a quality control process where the flood zone determination is verified. This may entail including a step in the QC Checklist, building an automated process, or performing a secondary check to verify flood determination.

Record Keeping

As per federal regulations (Regulation H - 12 CFR 2018), you should maintain a copy of the SFHDF for the period of time that you own the loan. Retaining the SFHDF also supports the following:

  1. Refinancing: The original SFHDF can be used for loan refinancing a loan for up to a period of 7 years.
  2. Loan Servicing: The flood insurance must be maintained for the entire life of the loan. SFHDF provides evidence as to why flood insurance was or was not maintained.

Form Version

FEMA periodically revises the version of SDHDF. The current version of the form is the FEMA form 086-0-32 (O.M.B. No. 1660-0040) which expires on May 30, 2015. Until the new form becomes available, you may continue to use the existing form or the previous version of the form. The previous version of the form is FEMA form 81-93, which expired on December 31, 2011.

Determination Fees

The fees for flood zone determination may be charged to the borrower only if the flood determination is made or results from:

  1. Loan origination, increase, renewal, or extension
  2. In response to a remapping by FEMA
  3. The purchase of flood insurance under the forced-placed provisions.

Reasonableness of Determination Fees

Federal regulations require that you can only charge a reasonable fee for flood determination. The flood zone determination fee is shown on the Settlement Statement (HUD-1) as part of the 800 series. Within the Good Faith Estimate (GFE), the fees are shown as part of Required services that we select with the segment titled Your Charges for All Other Settlement Services.

Source :www.MortgagesAnalyzed.com

Verifying Accuracy of Standard Flood Hazard Determination Form

Below are certain steps that you can take to verify if the flood determination in SFHDF is correct.

  1. Flood Smart: Go to FEMA’s Flood Smart website (www.floodsmart.gov), and enter your address in the form titled "How Can I Get Covered?". The website will identify whether your property is in a flood zone. However, note that not all addresses are available on the site. Another limitation is that the website does not provide whether federal flood insurance is available or not.
  2. Appraisal Report: The appraisal report lists whether the property is in a flood zone. This is typically listed on page 1 of the uniform residential appraisal report (FNMA Form 1004). If the flood zone determination within the appraisal report and the SFHDF are not same, then the lender should follow up with the flood zone determination company and the appraiser to ensure that they address the discrepancy.
  3. FEMA Flood Maps: This is a reliable, yet cumbersome, method of verifying whether the property is in a flood zone. To access the flood maps visit the FEMA’s Flood Map Service Center (MSC) webpage. MSC is the official public source for flood hazard information and you can use it find your official flood map.
Source :www.MortgagesAnalyzed.com
 

Document Summary

 
Standard Flood Hazard Determination Form
Purpose
SFHDF identifies whether a property is located in a special flood hazard area, if the borrower is required to obtain flood insurance, and if federal flood insurance is available.
Use in Mortgages
The lender relies on the SFHDF when making, increasing, extending, renewing, or purchasing a loan to determine whether or not flood insurance is required and available on the property.
Common Names
  • Standard Flood Hazard Determination Form
  • Flood Certification
  • Flood Cert
Type
Form
Provided By
Lender (generated by Flood Zone Determination Company)
Provided To
Borrower
Notarization Required
No
Signed By
None
Life Cycle Stage
Origination and Servicing
Recordkeeping
The SFHDF should be retained for as long as you own the loan
Model Form
FEMA Form 086-0-32 - Standard Flood Hazard Determination Form
Applicable Laws
  • National Flood Insurance Reform Act of 1994
  • National Flood Insurance Act of 1968
  • Flood Disaster Protection Act of 1973
  • Regulation H 12 CFR 208.25
Source :www.MortgagesAnalyzed.com

Updated: Mar 21, 2015

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It identifies if the property is located in a high risk flood zone
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